Positive Buyer Strategies for a Tough Market
With the way the housing market is at present, it’s tough for buyers to compete and even harder to stay positive, and things may seem especially hopeless for first-time homebuyers; they have no previous home on which to draw equity, and they can also be dealing with sky-high rent and high student debt balances, making it extremely difficult to save for a down payment.
Buying a home is always emotional, and having to deal with disappointment and uncertainty just adds to the stress levels. So how can buyers stay positive in a market like this? We’ve put together a few tips on how buyers can make smart decisions, and move in the right direction towards finding their new home.
1) Mortgage pre-approval
To show that you’re a serious buyer, one of the first things you should do is to select a mortgage lender and get pre-approve you for a home loan. In addition to helping you find out your price range, it also shows you have a commitment from a lender to finance your purchase. When sellers review your offer and see that you are pre-approved, they tend to be more likely to accept your offer over one without pre-approval.
2) Tell everyone you know you’re looking for a house
If you’re looking for a house, let everyone know about it. Reach out to your personal network and maybe on your social media. You’ll be surprised how many potential homes or home buyers you can find that way.
3) Be open to a rent-back agreement
One way to buy a house is to be sympathetic to the seller’s situation. Sometimes sellers are in the process of closing on a new home themselves, but their timeline might not align with yours. Something that’s becoming more common is to build-in a rent-back agreement into the contract that allows them to stay in the house for a set amount of time after closing, becoming a temporary tenant, and giving them additional time to close on their new home, pack up, and get themselves in order.
4) Invest your muscle-power
If the home you choose needs work but is otherwise solid, roll up your sleeves and get those renovations done. Many homes are selling for sky-high prices, some that are not yet list-ready because of uncompleted repairs or updates may struggle to sell. This may allow you to buy them well below market price. Buyers can then stay within their budget, put some sweat into renovations and end up with a great home.
5) Wait it out
Making a hasty purchase in the housing market because you’re sick of losing out to other buyers is rarely a good thing. If you’re having trouble finding the right home, why not wait it out; if you can deal with your current housing situation, or maybe rent another place for a year or two, you may end up with a better house in the end.
More Strategies for homebuyers and sellers
With mortgage rates spiking and home prices dropping, many buyers and sellers are unsure what their next move should be.
For sellers, one common piece of advice is simple: price your home realistically. This isn’t the housing market of a year ago, so buyer traffic will be substantially slower, however, appropriately priced homes are still selling well.
But if you’re holding out to the highest price, you may end up stuck with your home for quite some time. Sellers need to consider making some concessions and compromises, rather than risk getting stuck with the property for a long time.
Potential buyers face a different problem; they have a difficult choice to make: either postpone a purchase until prices drop, or lock in a mortgage now before rates get even higher. This puts buyers between a rock and a hard place.
The prevailing sentiment seems to be to hold off until financing becomes more affordable, especially if you can handle it where you are at present. However, if you are in a strong financial position, you may want to commit to a purchase while house prices are relatively lower than they have been of recent. You can always refinance your mortgage later on when rates become more affordable.
For more advice and strategies and today's market, contact Jeremy Osborne today!